How do taxes work when renting a car from Lyft?
I rent a car from Lyft. It costs $258 a week. I make the $258 to cover my rental and roughly an extra $30 that I put towards taxes. Will I have to claim everything as income next year? What can I deduct? The reason I m renting is because I totalled my car and can t afford a new one. I use my Lyft rental to get me to my full time job. I asked my accountant this question, but she s not familiar with this type of situation.
- Anonymous1 year ago
If you can afford to rent a car at $238 per week - then you can afford to buy a car.
- Casey YLv 71 year ago
Using your business asset for personal use changes the deductibility...
- AmyLv 71 year ago
If you're renting a car (at a ridiculously high price) just to commute to work, then that has nothing to do with taxes.
If you're driving for Lyft, then you can deduct your business-related expenses from your revenue. You only pay tax on profit.
But if you're using a business asset for personal use, you can only deduct the business-related portion of the cost.
- Max HooplaLv 71 year ago
You can deduct the rent, fuel, insurance and maintenance costs or you can deduct the IRS standard mileage rate of 58.5 cents a mile for business miles (paid by fares or deadheading.) When the smoke clears you will probably be earning about minimum wage.
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- Coffee DrinkerLv 71 year ago
You are running a business, so all the money you make is revenue. All the money you spend is expenses, and your profit is revenue minus expenses.
You pay tax on net profit, which is revenue minus expenses.
So for example if you make $3000 in fares, but you spend $1200 on the car rental, $600 on gas and $200 on other things you have $2000 total expenses. You will owe self employment tax and income tax on $1000 net profit.
- SlickterpLv 71 year ago
The rental of the car is not deductible in any way unless you are using it to drive for Lyft. Using it to commute to work - not in any way deductible. Only mileage you drive for Lyft is deductible.
- EvaLv 71 year ago
You are going to have to allocate the cost of the rental and gas into business use and personal use. You do this by keeping a mileage log and figuring out the percentage of business use. Your mileage to and from your main job is not deductible as it is considered commuting expense.
- Anonymous1 year ago
You are running a business.
You should have an Account, and business Lawyer on retainer.
Within limits, you deduct the Taxes, License fees, Liability and Automotive insurances, Gasoline, maintenance etc.
Consult your Chartered Accountant, for details or you may end up in IRS court or city/state Revenue trouble too.
- A HunchLv 71 year ago
Your accountant is familiar with your question.
OH BOY OH BOY... Let's pay $1118 a month to have a car to get you to your full time job. Wouldn't it be so much more cost effective to spend $1118 ONE MONTH and buy a jalopy to get you to your job. Or save $1118 for 3 months to get an ok, sort of decent job.
Your logic for needing to use a lyft rental is ridiculous.
If you make $288 a week driving for lyft. You would decide
- the $258 rental
- you would deduct the gas you have paid
- you would deduct the maintenance that you had to pay for the car (Lyft) express drive covers oil changes & tire rotation, you are responsible for everything after that.
Since you are operating your Lyft business as a loss, you aren't paying any taxes.
But don't think it's a great deal because you owe no taxes. You have paid $13,500 if you keep the car a year and have nothing to show for it... except a sore tussie for sitting in a car all the time outside your regular job & broken down hips from pressing the car petals.
- Valleycat1Lv 71 year ago
I would think you would use schedule C, report all gross income, then deduct the rent and maintenance expenses as cost of doing business. I am not a tax expert but am an owner of a small business. You need to find a different tax expert. Remember that as a contractor you also have to pay all your own payroll taxes (social security and Medicare), schedule SE, which is more than what you are setting aside. Also try looking at the IRS.gov website - they have a lot of user friendly info there for the self employed or business owners.